NEW DELHI: General Motors will shut down its last factory in India a day before Christmas, the fallout of raging tension between India and China. GM wanted to sell its Maharashtra factory to Great Wall Motors, China’s largest SUV maker, for over Rs 2,000 crore, but India has not cleared the deal.
With the closure of the Talegaon plant on Thursday, GM will bring the curtains down on its India operations which began in 1996. GM had already sold its other Indian factory (at Halol in Gujarat) to China’s SAIC in 2017, which is now being used by MG Motors.
There are 1,800 salaried and hourly employees at the Talegaon site, a source said.
The deal between GM and Great Wall was announced in January when they signed a binding term sheet, and this was to close in the second half of the year.
However, with border tensions on the boil, India put in place stricter rules for investments from China and other neighbouring countries. And in June, after the killing of 20 Indian soldiers in Ladakh, Maharashtra said it was putting the GM-Great Wall and two other deals (worth Rs 5,000 crore) on hold.
Amid the hostility, the government had decided to scrutinise all investment decisions from neighbouring countries in a move that was aimed at holding up flows from China. The Talegaon plant was being used to export cars, primarily the Chevrolet Beat, to Mexico. This has now stopped, forcing the company to shut down the factory with no deal in place with Great Wall.
It is understood that GM has told shop floor workers that they will paid salary till January 25. The GM India spokesperson remained hopeful of a solution to get the deal moving. “Both companies continue to work with all relevant authorities to secure necessary government approvals to support the transaction, which will deliver future jobs at the site.”
The company said it will support the impacted employees with separation packages and transition support. “We have made all relevant disclosures regarding investments in operations.”
It is understood that in the absence of a fund flow from Great Wall Motors, GM will have to fund the closure liabilities on its own. It will need to pay for the severance payout to workers, while also requiring an approval from the Maharashtra government for layoffs.
Some sections fear that GM’s exit could get tangled in legal and bureaucratic problems if workers decide to challenge the severance package, especially as chances of fresh jobs look bleak.
Great Wall Motors had said earlier that it has started work to identify cars, parts suppliers and dealers for its India foray. It had plans to invest a cumulative $1 billion in India in a phased manner in areas, including research and development, manufacturing, model launches, and sales and marketing.
The company planned to drive in its SUV brand Haval and electric vehicles to India, and looked to give direct employment to around 3,000 people.
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December 21, 2020 at 06:27AM
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China tensions trip General Motors unit sale - Times of India
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